Judge Blocks Former Microsoft General Manager From Working For Salesforce

from the noncompetes dept

A few years ago, we covered some of the research on the impact of noncompete agreements on innovative industries. Basically, noncompetes are effectively a form of DRM on human capital. They diminish the pace of innovation in that they get in the way of idea sharing and the free flow of talent to where it can be most effective. Not surprisingly, California refuses to recognize noncompete agreements as enforceable. So, it's a bit strange to see, as pointed out on Slashdot, that a former Microsoft General Manager, Matthew Miszewski, cannot work for Salesforce.com "in a marketing role in salesforce.com's public or commercial sector anywhere in the world." It's that "anywhere in the world" part that has me scratching my head. If Miszewski moved to California, where Salesforce is based, could the Washington court actually do anything? The Slashdot post also points out Microsoft's hypocrisy on this issue, in that it's happy to restrict the "flow of talent" from its own staff, but on immigration always argues about the importance of the free flow of talent to American innovation...

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That might be true of him moving to another State of the USA (though I think supremacy problems regarding a civil court in one state telling another state that their STATUTE is not relevant)

It would not be relevant if he then moved internationally to another country where the Washington court has NO jurisdiction to enforce its order whatsoever if the law (or civil precedents) of that country negated the court order.

In fact I'm personally sick and tired of US CIVIL courts stating "anywhere in the world" when they know full well that that is a tortuous, eronious, and bordering on nonfeasance statement.

As for breaching his contract, that noncompete part of the contract would be instantly voidable, if not unconscionable, in most places in the world. The only caveat that can be really placed on anyone moving from one place to another in form of work/service is that they do not void any non disclosure agreements or remove data from old place. Otherwise as most countries have stated a non-compete could be classified as a form of ownership of the individual ie: slavery

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Courts will enforce Washington state employment contracts

Microsoft has successfully used its non-compete clause to prevent people from taking jobs at California-based competitors before.

Perhaps the most famous example of this was when Kai-Fu Lee left Microsoft to run Google China. Microsoft sued and Google counter-sued. They eventually settled out of court, but the court most definitely did not dismiss Microsoft's claims out of hand.

The anywhere in the world part is only valid in jurisdictions where such a clause is legal. Everyone knows that contract clauses don't apply in places where they are invalid but contract makers make contracts as restrictive as possible so that it can cover as many restrictions as whatever jurisdiction the contract happened to be signed in allows.

Washington non-competes are fairly broad right now, All the law says is that it must be reasonable in duration, location, scope. More Info

Since Microsoft filed in Washington state (because the contract was signed in WA state and Employment was in WA state) and because Microsoft filed first they basically got to choose a venue that was favorable to them. I am sure there was a clause in the contract that said all lawsuits will be held in WA state as well. However a declaratory lawsuit in CA finding the statement in the contract is invalid in the state of CA may help others in the same situation.

However this contract fails at one of the basic requirements of the WA state non compete agreement, Location of "the world" is overly broad, most commonly in actual state case law a range of 100 - 200 miles is about as much the court is willing to accept and over 500 miles (outside the state) shows the employee tried to work with an overly broad contract. Winnings in court would be minimal if this was pushed to trial. If I recall correctly salesforce also has an Asian branch the guy could work at and then there would be no way he could be found in breach of contract.

Oregon state has much more strict non-competes and CA has almost none (you must sell a business basically). In Oregon for a non-compete to be acceptable you MUST be Upper management or an officer, make at least ~60k / year, have access to company secrets, and the company has to pay half your salary as long as the agreement is in effect.

Just some fun background for Oregon, the harsh non-competes started when fast food joints started putting them in the hiring agreements for min wage jobs. Then, when a worker would go to a different food job (McDonald's -> Mom & Pop) McDonald's would sue the business that hired its staff away in an attempt to drive away the business's it did not like away.

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Free flow of talent

I think it's a bit of a stretch to compare a dislike of having your employees spill your secrets to the competition with supporting talented foreign programmers entering the country.
Not the same thing at all.

I was once asked to sign a non compete with a small specialised company. No biggie, their competition was a joke and I'd never want to go work for them.

But my employer got bought by a behemoth who supplied a vast array of products to the life science industry. It was once claimed to me that the non compete now applied to the competition of the new owners. This would force me to leave the entire industry if I ever left.

I think in the UK you cannot remove someone's means of earning a living. So a court judgement that confiscated a carpenters's tools, or a non compete that ruled out any way to practice the trade the person was qualified for, would be illegal.

Most of us see non compete's as almost irrelevant because we're simply not important enough.
- noone would spend the money suing for ordinary folks like us
- most HR depts wouldn't even know we had gone to the competition if we weren't in mega high profile jobs.

But in most cases, "forgetting" to sign it from the outset is the easiest policy, because at the beginning they are happy to have you there and don't make a fuss and thereafter it gets forgotten due to HR incompetence.

Issue of Law

The judgment could be recognized in California through constitutional analysis. This is pretty problematic, as a judgment in one state is usually recognized in another state. The attorney should have removed the case to California.

Still, the entire world provision is pretty broad. I can see this being appealed easily, as jurisdiction doesn't extend that far.

Forgot one

Everything listed in this article is accurate, except suppression of salaries has been left out as is strongly prevalent in Vegas due to the lack of any real industry. You can change jobs here, but the requirement is 3 to 6 months of lost income, since you are barred from competing, and there is really not other place to work, except leaving town.

Left and Right

The truth is this - as long as you are an underdog company we want everybody to be fair to you and everybody like yours. But once you reach the commanding heights (Google, Microsoft etc)you want to secure your rights and snuff out the underdog, because you are secure in the knowledge that any underdog if not prevented is going to come and eat your lunch, dinner and what have you...!

Hasn't this been a "Standard Practice" for years in the contracting job market?

Hasn't this been a "Standard Practice" for years in contracting job market? Hell still remember the practice of OEMs in Detroit in the early 90's requiring folks to sit a month unemployeed as they switched to better positions - to reduce "jobhopping". Caveat emptor, it is always going to be up to the individual person to review the contracts (and selectively sign those that could bite them in the butt later on).

It is a wonder that folks like Huffington Post (and other 'new paradigm' companies) haven't been trying this sort of crap with its "employees" yet. I see it now... "you can 'volunteer' your work to me, but not get paid by anyone else."

Not signing the noncompete wouldn't have worked at Microsoft

Obviously the "don't bother signing it" tactic works elsewhere, but it wouldn't have worked at Microsoft. As far back as 1987, when I started there, they wouldn't have let you leave the onboarding room without having signed it. They were as picky about it as they were about proof of citizenship.

Moreover, they give you a copy of it during your exit interview to remind you of your obligation.

During Kai-Fu Lee's lawsuit between him, Microsoft, and Google, Google definitely argued California jurisdiction but they also threw in the fact that since he was taking a job in China, Washington court rulings didn't apply there.

Clearly neither Google nor Microsoft didn't think they had a slam-dunk case, or at least one that would be resolved quickly, because they settled. Either way there was a cloud over his ability to start his job.

It all depends on the employee in question, the company being moved to, and Microsoft's corporate mood at the time. But I can say that as an employee in the state of Washington, it's pretty well known that your company may choose to enforce a non-compete and that it may well work.